Indonesia will inevitably face a new global landscape within 20 years, where people, goods, services and capital will be able to move more freely across borders, a Bank Indonesia discussion was told Tuesday.
In response, the government needed to start preparing now by promoting an approach that allowed policies to be adapted quickly, instead of setting rigid quantitative targets.
The discussion, Bank Indonesia's first twice-monthly roundtable forum of the year, took as its theme "A critical view on the national long-term development plan 2005-2025."
State Minister for National Development Planning Paskah Suzetta said that the country's current long-term development plan was divided into four medium-term plans (RPJM), and had the overall target of achieving an independent, developed, just and prosperous Indonesian society by 2025.
Also speaking during the discussion, economist Djisman Simandjuntak said that adaptable planning was essential, rather than focusing exclusively on rigid quantitative targets.
Djisman, who also chairs the board of directors of the Centre for Strategic and International Studies (CSIS), referred to a number of important changes that were expected to take place in the next 20 years. He said the world would see a new geographical landscape emerge, with China, India and ASEAN becoming new global centers.
"Within 20 years, we will see massive erosion of the 400-year-old Westphalia system, where a nation's sovereignty was paramount beyond everything else, and where foreign nations could not meddle in another country's domestic affairs. In the future, this will change dramatically."
Djisman also mentioned the possibility of ASEAN becoming a single market, with a strong chance of adopting a single currency, not only to be used by ASEAN members but also by Japan, with which most ASEAN members had strong trade relations.
"In such an uncertain future, planning can only be indicative in nature. Therefore, it is better to have a planning policy that can accommodate change," he stressed.
He also urged Indonesia to prioritize the development of its human resources.
"According to UNESCO world education indicators, Indonesia is the lowest in terms of fostering human capital, with government spending on education only 1.9 percent of GDP, while the figure for Malaysia is 8.1 percent, South Korea 7.1 percent and Thailand 4.6 percent," he said.
Meanwhile, Indonesian Employers Association (Apindo) chairman Sofjan Wanandi said that the country was already having problems formulating sufficiently responsive policies to ever-changing global economic challenges.
Sofjan said that despite the cuts in BI's key interest rate, which has been trimmed 10 times since May to 9 percent, with the most recent cut being on Tuesday, this had failed to boost the growth of the real sector.
"The monetary situation is improving, but investment growth is decreasing. Clearly there is something wrong. Most businesspeople are in a `wait and see' mode, and don't want to fall victim to the risks imposed by instability," he said.
In response, BI senior deputy governor Miranda S. Goeltom said that all five of BI's roundtable discussions this year would focus on real-sector issues.
"The competitiveness of Indonesian products is decreasing. Despite improvements in the macroeconomic indicators, the real sector is worsening and prone to external shocks, such as increases in fuel prices ... we need to reflect and prepare a strategy to fast-track development."
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